You can sign up for Making Tax Digital for Income Tax for the current tax year or the next one before you are required to, using HMRC’s online sign up service. Volunteers get no penalties for late quarterly updates, but must agree to the new penalty rules for late returns and late payment, and that choice cannot be reversed. Joining early is mainly worth it as a practice year before your compulsory start date.

Who can sign up voluntarily?

HMRC’s sign up guidance says that to sign up you must be registered for Self Assessment and have submitted a tax return in the last 2 years. You also need income from self employment as a sole trader or from property, because those are the only sources that MTD covers. You can volunteer for the current tax year or the next one. HMRC’s own example is someone who will need to use the service from 6 April 2027 signing up now.

Before volunteering, check when you would be required to join. Your qualifying income on the relevant return decides this: over £30,000 on the 2025 to 2026 return means a start date of 6 April 2027, and over £20,000 on the 2026 to 2027 return means 6 April 2028 (see MTD thresholds). Partnerships are not yet within MTD; HMRC says it will set out their timeline later.

How do you sign up?

Choose your software first, then use HMRC’s sign up service with the user ID and password from your Self Assessment registration. You may need to prove your identity using a mobile phone app and your passport or driving licence; HMRC removed the option of answering questions instead on 13 October 2026. The service asks for:

  • your business start date, or the date property income started, if it was within the last 2 tax years;
  • the tax year you will start;
  • for sole traders, the business name, address and trade.

You must check every self employment and property income source shown and add any that are missing, and tell HMRC about any that have stopped since your last return. An agent can sign you up instead; the steps for firms are in signing up clients for MTD. You will not be asked about other income such as dividends; that goes into the software before you file the return.

What do you have to do after joining?

A volunteer has the same reporting duties as anyone else for the years they are signed up. If you join part way through a year you must create digital records from the start of that tax year, and use your software to send any quarterly updates you have already missed. You then send updates by 7 August, 7 November, 7 February and 7 May, and file the return through the software by 31 January after the year. Your software must be authorised before you start.

How do penalties work for volunteers?

HMRC has separate penalty guidance for volunteers. The key points are:

  • You must agree to the new penalties when you sign up, and you cannot change your mind. HMRC says you cannot go back to the old penalties even if you stop volunteering. An agent can agree on your behalf but should discuss it with you first.
  • Timing: HMRC writes to confirm when the new penalties apply, once it has checked you are signed up and moved your records to its new system. Earlier years stay on the old rules.
  • Quarterly updates: no penalties for late updates while you are volunteering, though they must be sent before you can file the return.
  • Late returns: one point for each late return. The threshold is 2 points, at which a £200 penalty is charged, with a further £200 for each later missed return.
  • Clearing points: a single point expires after 24 months. At the threshold you must file your next 2 returns on time and send any returns outstanding for the previous 24 months.
  • Late payment: the new percentage based penalties apply, explained in MTD late payment penalties. For 2025 to 2026 HMRC lists 3% of the tax owed at day 15, 3% of what is still owed at day 30, and 10% a year from day 31.

What changes when you become required to join?

From 2027 to 2028 onwards, once you are required to use MTD, late quarterly updates start to earn penalty points and the threshold rises from 2 to 4. HMRC says that if you already have 1 point when this happens it becomes 3, so you remain 1 point from the threshold. The MTD penalty points page covers the mandatory regime.

Late payment also changes. Everyone gets a 30 day window to pay or arrange a payment plan in their first year under the new penalties, but only once. A volunteer uses it in the year they volunteer and has 15 days when they later become mandatory.

Can you stop volunteering?

Yes. Your HMRC online account lets you opt out if you are using MTD voluntarily, and lets you sign up again later if you were signed up and opted out. Opting out does not take you back to the old penalty rules once you have agreed to the new ones.

Is joining early worth it?

For most people the case for volunteering is practical rather than financial.

Reasons to volunteer

  • A year to learn the software, set up bank feeds and categories, and fix record keeping problems without quarterly update penalties.
  • A tax estimate after each update, which helps with budgeting.
  • Time to sort out digital links between spreadsheets and bridging software before they are compulsory.

Reasons to wait

  • The penalty choice is permanent. Under the old Self Assessment rules the first late payment penalty is 5% of tax still unpaid 30 days after the due date; under the new rules, outside your first year, 3% (4% for 2027 to 2028) is charged on tax still unpaid at day 15.
  • You use up the one off 30 day first year window.
  • If your records are in poor shape, fixing them first may be a better use of the year.

The penalty argument weakens over time, because HMRC says the new penalties will apply to everyone who files a personal Self Assessment return from April 2027.

How might a volunteer year look?

Illustration only. Sam’s 2025 to 2026 trading turnover is £34,000, so he must join on 6 April 2027. He signs up in October 2026 for the 2026 to 2027 year.

  • He creates digital records back to 6 April 2026 and sends the missed August update straight away, with no penalty.
  • His 2026 to 2027 return, due 31 January 2028, falls under the new points system with a threshold of 2.
  • From 6 April 2027 he is mandatory: his threshold becomes 4 and late updates for 2027 to 2028 earn points.

What mistakes do volunteers make?

  • Agreeing to the new penalties without realising the choice is permanent.
  • Treating late updates as harmless: they must still be sent before the return can be filed.
  • Not keeping records from 6 April when joining part way through the year.
  • Forgetting that opting out still leaves you on the new penalties.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.